LONDON – Fabless consumer chip company Mediatek Inc. has announced it has offered to buy a local Taiwan rival MStar Semiconductor Inc., according to a Reuters report that cited a statement from MediaTek as its source.
MediaTek is offering 0.794 of its own shares and NT$1 in cash for every MStar share. MediaTek would initially acquire between 40 and 48 percent of MStar's outstanding shares through the offer with plans to acquire the rest of the company at a later date, the report said.
Other local reports said that board of MStar has agreed the terms and that a full merger deal is expected to close early in 2013. The reports valued the bid for up to 254 million shares in MStar at NT$55.50 billion (about $1.9 billion).
"Facing intense worldwide competition and fast-changing market dynamics, we believe that the combined company will be in a strong position to compete and will further elevate MediaTek's global competitiveness," the Reuters report quoted MediaTek chairman M.K. Tsai as saying in the statement.
MediaTek and MStar are both public companies headquartered in Hsinchu Taiwan and both make SoCs that go in smartphones and other consumer and multimedia electronics. The two companies are among the leading fabless chip companies in the world with MediaTek ranked number six and MStar ranked number 11 in 2011, according to market research firm IC Insights.
MediaTek had annual sales of $2.97 billion in 2011 and MStar had annual sales of $1.22 billion, according to that ranking. A combined MediaTek and MStar entity would have been the world's fourth largest fabless chip company in 2011 ahead of NVidia and Marvell.